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How
much deviation from your in-store plan can you
afford? |
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Meet
the Out of Stock Family. You DON'T want them
in your
neighborhood!
ShelfSnap, working with its leading
clients, has identified not one but four basic
types of out of stocks! In a number of
studies covering both DSD and Warehoused products
in the top four grocery sellers, we found 25% of
the planogrammed SKU's effected by at least one of
the following out of stock
conditions.
Of course, it doesn't
really matter if the number is 8% (as usually
reported) or 25%, if you aren't equipped to fix
the problem.
The
Out of Stock Family Tree
- Traditional Out of
Stocks: Products that are
clearly supposed to be in a space on a
particular shelf in the store. This was
the type of out of stock that the industry
identified and quantified in over 54
International studies done since the early
1990's. The results of those studies are
consistently 8% of the SKUs in any given
category. Scores of "solutions" have been
offered and billions of dollars have been spent
. . . the out of stock results have not been
helped at all.
- Distribution
Voids. An Out of Stock is
defined as a product being absent from a shelf
and distribution voids are very much a type of
Out of Stock. Business plans rely on a
product being exposed to enough consumers to
generate expected sales. If those products
are in the plan, but not on the shelf then they
cannot contribute to the expected sales
results. Some industry experts believe
that distribution voids are quantitatively, as
great a problem as traditional Out of
Stocks. Our experience is that voids are a
much bigger problem than Out of
Stocks. In order to understand
assortment voids ShelfSnap evaluates the plan in
addition to capturing the in-store conditions upon which our
assortment measurements are
built.
- The
third Out of Stock involves a product that has
Fewer Facings than
Planned. Facings are not only
part of the greeting that a product is supposed
to offer to a consumer . . . they are part of
the supply chain requirements to KEEP the
product in front of the consumer.
- The
fourth type of Out of Stock is an
Under-Stock.
This is a condition where a
multi-faced item is totally out in one of more
of its facings. When a multi-faced product
has holes on the shelf it looks incomplete,
unable to greet the shopper-consumer. It
may also be an indication of inadequate facings.
This is an important condition to quantify
and report.
Multiple
Out of Stock Conditions Typically Exist in the
Same Store.
In
this particular category the number of products
with under-stocks was equal to the number of
products with out of stocks. And the stores
that had high out of stocks tended to also have a
high number of under
stocks.
Fix
the Problem
Out
of Stocks continue to be a vexing problem for this
industry. Understanding the type of out of
stock with which we are dealing is important in
identifying how to solve the underlying problem.
Traditional Out of Stocks are complex and
hard to fix.
The good news in
almost every case is that it is possible and
profitable to fix the out of stock conditions at
the shelf.
Type
1 and Type 4
Solution
In
the case of chronic Type 1 (Traditional) and Type
4 (Under-Stock) Out of Stocks there are only three
possible solutions:
- A
thorough review of the set to identify products
that can either be culled or facings reduced to
make room for the chronic Traditional and
Under-stocked items.
- Less
likely is the requirement to build out
additional space to meet demand for the
category.
- Allocation
of additional labor to increase frequency of
routine re-stocking efforts.
Beverages
generate about a half million in sales per store
each year. The out of stocks and
under-stocks affecting this category are about
8.6% of the 305 sku's in the category, but those
are some of the highest volume items accounting
for at least 14% of sales. Conservatively,
we should be able to generate about $15,000 in
incremental sales through the re-stock frequency
program.
If we chose a strategy to
re-stock more frequently, we can approximate the
benefit and the cost of the program. SKU
rationalization can only have the desired impact
if the selected product is available to the loyal
shoppers. Restocking and maintaining shelf
presence is better than the alternative of losing
the sale.
Big
problem, Big Reward, Easier
Solution
The
Sales Impact of out of stocks has traditionally
been pegged at 3-4% of total sales. Based on
our findings there is a 10-15% loss with more than
25% of sales affected by one of the four
out-of-stock types. Not every store will
generate these results, but how many could return
these results if they were not affected by the
four types of out of stocks we have
identified?
The critical and
historically missing link here is realizing that
the problem exists in the first place and viewing
the category through the same "lens" as your
shoppers. Having a quick response,
task-oriented capability based on the store
measurement findings is this lens for store
"doers". For the first time we have a tool
to directly impact at least part of this very ugly
family.
ShelfSnap™
a word is worth a thousand
pictures. | |
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